Utility board raises franchise fee to give employees pay raise

Members of the electric utility board agreed to inject $260,000 into the city of Gardner’s budget next year. At a special meeting, the board members approved a measure that would increase the city franchise fee from 5 percent to 7 percent.

According to Bill Krawczyk, Electric Utility Director, the fee increase would not lead to a utility rate increase for consumers. It will, however, slow the speed at which the utility board increases its own reserves.

Unlike other electric utilities, franchise fees, funds that typically go from utilities to municipalities — in Gardner are included in the rates.

The proposal board members approved Nov. 15 would increase the franchise fee from 5 percent to 7 percent in 2011, but the increase would dissipate over time and the fee would return to 5 percent in 2015.

“I can’t promise that it’s going to go away, but I can promise you that the proposal we put before the board was to start in 2011 and end it in 2015,” Krawczyk said.

Utility board members hoped the fee increase would help the city council give employee raises next year.

“We put a proposal in front of the board and this was a good faith effort on the part of Gardner Energy to try to help the city through this economic crisis,” he explained.

The city has a budget shortfall, and most employees have not received salary increases since 2008. They have, however, had at least one bonus.
Krawczyk said city employees have also had their pension plans reduced by 75 percent and had layoffs.

“Gardner Electric has had a lot of discussion about how we can assist with this,” he said.

Ryan Beasley was the only electric board member who opposed the proposal.

“My main reason was because we couldn’t make sure that the money went towards the employees,” he said. “We can give it to the city, but they can do whatever they want with that money. If we did it, I wanted to make sure the city employees get the money. But it’s not our say in what the city council does.”

Krawczyk said he works closely with many city employees. His main concern is that there are key people – especially some of the director-level employees – that are not paid well for their experience.

“I believe where we’re headed is if we lose those employees, the level of service we provide will go down,” he said. “I believe the residents will be very unhappy.”

Utility board members set a goal not to increase rates for five years when the utility split from Gardner in 2008. To date, residents have not seen a rate increase.

“In the meantime, our competition, they’re asking for rate increases,” he said.
They’re increasing fees and rates, in part, due to mandates for renewable energy and wind power that municipal utilities aren’t required to meet, Krawcyzk said.

The Gardner board came up with the idea to increase franchise fees to help the city after researching a similar plan in Kansas City, Kan., he explained.

Although there is a philosophical school of thought that says utility funding and reserves should not be used to subsidize city budgets, Krawcyzk said the board didn’t approve a plan to do that.

“I don’t think it is. This is not a long term subsidy,” he said.

The electric board’s proposal will have to be approved by the Gardner City Council. Council members will then decide how the addition to the city’s budget will be used.